New solution needed for property taxes

December 16, 2007

If it's broke - fix it. Granted, that's easier said than done, but there is really no doubt that South Dakota's assessment system for property taxes is about as broken as it gets - and needs fixing badly. State law prohibits ag land that sells for more than 150 percent of its income value - which is determined by a complicated formula involving land value, cash rent and other factors - from being used to determine the value of neighboring ag land. Mary Worlie, Brown County's director of equalization, said that this year all but one ag sale in the county was excluded when there should have been 25 or so from which to draw. Let's be clear about this: Only one Brown County ag land parcel actually qualified this year. The rest of the land sales - by law - had to be thrown out of the equalization equation because they were all sold at more than 150 percent of the land's value. Though this might be great for the ag land owners - after all, their assessments won't increase - it is not at all good for most other Brown County taxpayers, who will see their burdens increase under the 2008 assessment plan - and over and over again in future years, unless a change is made. Worlie said, “The numbers aren't real anymore. I don't think anybody in the state has real (assessment) numbers.” There couldn't be a more true indication that something is terribly wrong with the system. Even commissioner Dennis Feickert, a farmer/rancher, said too many ag sales are being tossed out, adding that some farmers are paying taxes on only 20 percent of their land's true value. And that's just not right. To be fair, we need to mention that there is a second 150 percent rule that applies to non-ag property, but Worlie said the non-ag 150 percent rule resulted only 128 sales (22 percent) being tossed out, leaving her with 447 qualifying non-ag sales on which to base assessed value. We understand that the 150 percent rule is designed to - to borrow an example from Worlie - keep a Wal-Mart Supercenter built on what used to be ag land from impacting ag values. But, she also said, the value of ag land is increasing so quickly that many legitimate sales eclipse the 150-percent ag land barrier. Thus, the current problem; land that isn't being assessed at its true value. We don't have the answer, nor do we believe that last year's proposed constitutional Amendment D was the solution, but we appreciated the fact that people were at least trying to address the issue. Property tax issues are terribly complex - the Legislature needs to go back to the drawing board and work on a fair and equal solution.